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Thread: Dynamic Wealth Creation

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    Default Dynamic Wealth Creation

    Day 1.


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    Today learn

    1. Cash out.
    2. Gear Up / Equity Term Loan.
    3. Stagger Purchase.
    4. Improve Cash Flow and Maximizing loan.

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    Day One

    1. Cash out.
    2. Gear Up / Equity Term Loan.
    3. Stagger Purchase.
    4. Improve Cash Flow and Maximizing loan.

    Day Two.

    5. Pledge & Unpledged.
    6. ABSD - Decoupling.
    7. ABSD - Trust.
    8. ABSD - Part Share.
    9. Commerical / Industrial Loan

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    Type of Leveraging

    1. Income Leveraging
    2. Assets Leveraging
    Fixed Assets
    Liquid Assets
    3. CPF Leveraging

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    Mod 1: Concept of Wealth Creation

    Why Wealth Creation
    Debt free verses Financially Free
    Key Concepts of Wealth Creation
    The First Step.

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    Key Concepts

    Partnering Inflation
    OPM
    The Wealth Generators
    Start Early - The First Step.

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    The wealth Generators

    Passive Income
    Principal Repayment
    Price Appreciation.

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    Purchase Price = $1,100,000
    Investment (20% Down Payment) = $220,000

    Rental Income (per month) = $4,000
    less
    Interest Expense (per month)$1,400
    Principal Reduction $2,000
    Net Passive Income (per month) $600

    Net Income over 5 years
    Principal Reduction $120,000 (2,000x12x5)
    Passive Income $36,000 (600x12x5)
    Potential Price Appreciated @3% $165,000 (1,100,000x0.03x5)

    Potential Gain $321,000 (120,000+36,000+165,000)

  13. #13
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    Price and rental income slightly optimistic?

    Seems more like 1.5million price for $4,000 rent in general?

    Else may need more specifics like which development.

    Quote Originally Posted by Arcachon View Post
    Purchase Price = $1,100,000
    Investment (20% Down Payment) = $220,000

    Rental Income (per month) = $4,000
    less
    Interest Expense (per month)$1,400
    Principal Reduction $2,000
    Net Passive Income (per month) $600

    Net Income over 5 years
    Principal Reduction $120,000 (2,000x12x5)
    Passive Income $36,000 (600x12x5)
    Potential Price Appreciated @3% $165,000 (1,100,000x0.03x5)

    Potential Gain $321,000 (120,000+36,000+165,000)
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Still need to deduct 1 mth of rental for maintenance fee, 0.5 mth for agent, 1 mth for property tax, maybe 0.5 month for income tax. Only can net 9 mths of rental havent add in bank interest rate and whether u using cpf or cash for 20%. If using cpf u got to deduct interest for the amount.
    $4k is not possible for $1.1m... likely only can get $3k for now.

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    On the bright side:
    If interest is assume at $1400 per mth
    If rental at $3000 per mth
    Net amount per mth is $3000- $1400= $1600
    Net amount after deduction agent fee, maintenance fee, property tax, income tax. Assuming 3mths of rental. U get 9mths of rent per year.
    So $1600* 9mth= $14400 net rent per year.
    Down payment is cash (no cpf used) for 20% =$220k.

    $14400/$220,000*100%= 6.54%.

    6.54% per year is very good yield compare with bank interest. Plus your property might appreciate as time goes. If this is your second property u need 50% down payment and yield dropped to 2.6%...
    Last edited by star; 13-10-17 at 02:45.

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    Of course 50% down payment for second property is for those who still got property loan from bank for 1st property. If you own a property with your spouse, and you do not have a lot of your mortgage left to repay, you can refinance your current home loan from two borrowers to one. This allows the other party to take the full 80 per cent loan on the second property.

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    Quote Originally Posted by Arcachon View Post
    Purchase Price = $1,100,000
    Investment (20% Down Payment) = $220,000

    Rental Income (per month) = $4,000
    less
    Interest Expense (per month)$1,400
    Principal Reduction $2,000
    Net Passive Income (per month) $600

    Net Income over 5 years
    Principal Reduction $120,000 (2,000x12x5)
    Passive Income $36,000 (600x12x5)
    Potential Price Appreciated @3% $165,000 (1,100,000x0.03x5)

    Potential Gain $321,000 (120,000+36,000+165,000)
    This is just an example, if I use my Southbank the yield will shoot through the roof.

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    Which project in your opinion would be able to achieve this now? I mean base on current entry price.

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    Loan required $1,000,000.00

    Monthly income $10,000.00
    Interest 3.50%
    Loan Tenure 25 years
    Payment $5,006.24 0.6
    TDSR Pay required $8,343.73


    Loan Tenure 24
    Payment $5,137.14 0.6
    TDSR Pay required $8,561.90
    Required pay rise $218.17


    Loan Tenure 23
    Payment $5,280.11 0.6
    TDSR Pay required $8,800.18
    Required pay rise $456.45

  21. #21
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    http://investmentmoats.com/wealth-bu...row-over-time/

    Summary

    I hope this data serves you well. I came out of this exercise reinforced why wealth building through properties will always be a better option for many because of the low probability of people losing money.

    There are some cautions, both on the positive and negative side:

    Returns or Prices do not include Rental Cash Flow, which could improve the returns
    Returns or Prices do not include leverage, which could improve returns or kill you faster
    Returns or Prices do not include closing costs, and interest paid, which could drastically reduce your returns.
    What interesting things could you draw from this data that I missed out?

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    http://www.calculator.net/interest-c...t=0&x=117&y=23
    start principal start balance interest tax end balance end principal
    1 $200,000.00 $200,000.00 $5,000.02 $0.00 $205,000.00 $200,000.00
    2 $200,000.00 $205,000.00 $5,125.01 $0.00 $210,125.00 $200,000.00
    3 $200,000.00 $210,125.00 $5,253.11 $0.00 $215,378.12 $200,000.00
    4 $200,000.00 $215,378.12 $5,384.45 $0.00 $220,762.58 $200,000.00
    5 $200,000.00 $220,762.58 $5,519.05 $0.00 $226,281.64 $200,000.00
    6 $200,000.00 $226,281.64 $5,657.04 $0.00 $231,938.68 $200,000.00
    7 $200,000.00 $231,938.68 $5,798.48 $0.00 $237,737.15 $200,000.00
    8 $200,000.00 $237,737.15 $5,943.42 $0.00 $243,680.58 $200,000.00
    9 $200,000.00 $243,680.58 $6,092.00 $0.00 $249,772.59 $200,000.00
    10 $200,000.00 $249,772.59 $6,244.32 $0.00 $256,016.91 $200,000.00
    11 $200,000.00 $256,016.91 $6,400.43 $0.00 $262,417.33 $200,000.00
    12 $200,000.00 $262,417.33 $6,560.43 $0.00 $268,977.76 $200,000.00
    13 $200,000.00 $268,977.76 $6,724.45 $0.00 $275,702.21 $200,000.00
    14 $200,000.00 $275,702.21 $6,892.56 $0.00 $282,594.76 $200,000.00
    15 $200,000.00 $282,594.76 $7,064.86 $0.00 $289,659.63 $200,000.00
    16 $200,000.00 $289,659.63 $7,241.48 $0.00 $296,901.12 $200,000.00
    17 $200,000.00 $296,901.12 $7,422.53 $0.00 $304,323.65 $200,000.00
    18 $200,000.00 $304,323.65 $7,608.09 $0.00 $311,931.74 $200,000.00
    19 $200,000.00 $311,931.74 $7,798.30 $0.00 $319,730.04 $200,000.00
    20 $200,000.00 $319,730.04 $7,993.24 $0.00 $327,723.29 $200,000.00
    21 $200,000.00 $327,723.29 $8,193.09 $0.00 $335,916.37 $200,000.00
    22 $200,000.00 $335,916.37 $8,397.92 $0.00 $344,314.28 $200,000.00
    23 $200,000.00 $344,314.28 $8,607.86 $0.00 $352,922.14 $200,000.00
    24 $200,000.00 $352,922.14 $8,823.05 $0.00 $361,745.19 $200,000.00
    25 $200,000.00 $361,745.19 $9,043.62 $0.00 $370,788.82 $200,000.00

    According to a CPF interest rate of 2.5%,
    $200,000 will grow to about $328,000 in 20 years if left untouched.

    http://www.sgadvisorsnetwork.com/wha...-cpf-after-mop

    CPF Used: $200k
    Interest (20 years): $128k
    Property Sale Profit: $100k
    Loss of income
    = -$28k (Negative Sale!)
    Last edited by Arcachon; 14-10-17 at 17:29.

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    Quote Originally Posted by Khng8 View Post
    Which project in your opinion would be able to achieve this now? I mean base on current entry price.
    This is a $4299 a year question, you can pay $4299 to find out.

    https://www.srx.com.sg/subscribe-srx-enterprise

    Or you can try https://www.edgeprop.sg/ it is cheaper.

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    Quote Originally Posted by Arcachon View Post
    Loan required $1,000,000.00

    Monthly income $10,000.00
    Interest 3.50%
    Loan Tenure 25 years
    Payment $5,006.24 0.6
    TDSR Pay required $8,343.73


    Loan Tenure 24
    Payment $5,137.14 0.6
    TDSR Pay required $8,561.90
    Required pay rise $218.17


    Loan Tenure 23
    Payment $5,280.11 0.6
    TDSR Pay required $8,800.18
    Required pay rise $456.45


    Effects on loans
    Loan Tenure will be shorten as one get older.
    Interest Rate likely to increase in the mid to longer term
    Maximum Loan amount will be reduced significantly.

  26. #26
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    Financial Techniques

    1. Cash out.
    2. Gear Up / Equity Term Loan.
    3. Stagger Purchase.
    4. Improve Cash Flow and Maximizing loan.
    5. Pledge & Unpledged.
    6. ABSD - Decoupling.
    7. ABSD - Trust.
    8. ABSD - Part Share.
    9. Commerical / Industrial Loan

  27. #27
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    Just finish 2 hrs CreditSavvy.com.sg talk, cost $3595 for 2 days 1-night program.

    http://www.creditsavvy.com.sg/

    Good for those who think only of HDB and EC.

  28. #28
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    Quote Originally Posted by Arcachon View Post
    Financial Techniques

    1. Cash out.
    2. Gear Up / Equity Term Loan.
    3. Stagger Purchase.
    4. Improve Cash Flow and Maximizing loan.
    5. Pledge & Unpledged.
    6. ABSD - Decoupling.
    7. ABSD - Trust.
    8. ABSD - Part Share.
    9. Commerical / Industrial Loan
    Bro Arcachon, is it wise to take up term loan at say x% and deposit into CPF or other higher paying accounts at y%, assuming y is x+1%?

    If x suddenly goes beyond y then can refinance at a later stage to reduce the amount?

    Or better to stay put and continue to service, cheong to repay the mortgage?

    Any pros and cons to advise?
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  29. #29
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    Quote Originally Posted by Kelonguni View Post
    Bro Arcachon, is it wise to take up term loan at say x% and deposit into CPF or other higher paying accounts at y%, assuming y is x+1%?

    If x suddenly goes beyond y then can refinance at a later stage to reduce the amount?

    Or better to stay put and continue to service, cheong to repay the mortgage?

    Any pros and cons to advise?
    Both are not leverage, risk are low.

    Depends on age, if young take more risk, if old take less risk.

    For me I want to take more risk Bank from far hear my name start to run.

    In 2011 I took 660K than another 750K for a 899 psf property, now 2018 two bus stop from my property selling at 1600 psf.

  30. #30
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    Quote Originally Posted by Arcachon View Post
    Both are not leverage, risk are low.

    Depends on age, if young take more risk, if old take less risk.

    For me I want to take more risk Bank from far hear my name start to run.

    In 2011 I took 660K than another 750K for a 899 psf property, now 2018 two bus stop from my property selling at 1600 psf.
    Hi Bro Arcachon

    I am planning to do repricing for my property under $200k. Currently with OCBC.

    Any recommendation which bank i should go for?

    Thanks

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